When the Supreme Court decided last week to keep the controversial Consumer Financial Protection Bureau (CFPB) funded, some were surprised that Justice Clarence Thomas split from some of his conservative colleagues, writing the majority opinion to keep the CFPB intact.
In a 7-2 decision, the court held that Congress uniquely authorized the bureau to draw its funding directly from the Federal Reserve System, therefore allowing it to bypass the usual funding mechanisms laid out in the appropriations clause of the Constitution.
The financial watchdog agency bypasses typical congressional appropriations and simply requires the CFPB director to make requests of the Treasury Department for funds as needed.
The banking industry parties challenging the CFPB say that is unconstitutional, citing the appropriations clause.
But the high court’s majority disagreed. “In this case, we must decide the narrow question whether this funding mechanism complies with the Appropriations Clause. We hold that it does,” the opinion states.
“For most federal agencies, Congress provides funding on an annual basis. This annual process forces them to regularly implore Congress to fund their operations for the next year. The Consumer Financial Protection Bureau is different. The Bureau does not have to petition for funds each year. Instead, Congress authorized the Bureau to draw from the Federal Reserve System the amount its Director deems ‘reasonably necessary to carry out’ the Bureau’s duties, subject only to an inflation-adjusted cap,” Thomas explained.
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Author: Faith N
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